A futuristic approach to easing the labor crunch: interview with Shekar Natarajan

Editor's Note: Since this interview was conducted, Shekar Natarajan has made a job change, taking on a new role as president of Quiet Platforms.

While no one has a crystal ball to see into the future, Shekar Natarajan says there are a couple of things he can predict with confidence: 1) labor will continue to be one of the biggest problems facing companies everywhere, and 2) technology will be part of the solution. In that regard, Natarajan can speak with some authority, particularly as it pertains to the practice of supply chain management. During his 24-plus year career, he has served as a supply chain executive at some of the world’s best-known companies, including Coca-Cola, PepsiCo, Walmart, and The Walt Disney Co. Today, he is chief supply chain officer of American Eagle Outfitters, where he has seen firsthand how technologies like robotics and AI can help ease companies’ staffing woes.

Natarajan recently spoke with Diane Rand, managing editor of DCV’s sister publication, Supply Chain Quarterly, as part of our series on finding and retaining a first-class workforce. The interviews in this series, which will conclude in our April issue, were conducted for “Supply Chain in the Fast Lane,” a podcast coproduced by Supply Chain Quarterly and the Council of Supply Chain Management Professionals (CSCMP).

Q: Could you tell us a little bit about American Eagle Outfitters and your role at the company?

A: American Eagle is a leading fashion-brand retailer, primarily serving the 15- to 25-year-old [demographic]. My role there is twofold. First, I lead the entire supply chain for American Eagle Outfitters, from the time the product is made in the factory to the time it reaches the end-consumer. We pick up the goods, transport them via ocean and air, bring them into the country, run them through the distribution center, and make the merchandise available to stores and, ultimately, to consumers.

My second role is leading the two companies that we recently acquired: Quiet Logistics and AirTerra. Quiet is primarily an “edge-fulfillment” company that provides order fulfillment and returns management services for e-commerce retailers, while AirTerra is an e-commerce delivery startup that I like to think of as the Uber of inventory movement.

Q: At a time when businesses of all stripes are experiencing an acute shortage of labor, what is your company doing to recruit and retain the supply chain talent it needs?

A: We took action early on to really think about and prepare for the talent problems that are going to hit us down the road. We introduced a lot of programs to bring talent into our distribution facilities and to maintain and grow that workforce. For example, we provide our associates with bone conduction headphones so they can listen to music while they’re working—and no, it doesn’t impede them in their work. We also let our associates take cellphones out onto the floor. We have raised wages and simplified the work as well.

Just as you have customer perks, we offer “associate perks” for doing an excellent job. For instance, the associates can earn leverage points [that can be redeemed for] concert tickets or Starbucks [gift cards].

As for the people who work at our headquarters, we have put a very strong “location” program in place. We have increased our capabilities around data science. We have decentralized our operations with respect to where people work. We have given our associates the ultimate flexibility so they can do their work—and we can attract talent—from all over the world. I’m proud to say that we don’t necessarily have a talent challenge in our company.

Q: What do you consider to be some of the best human resources practices from a strategic perspective?

A: For any transformation to happen and for any company to stay relevant in the future, it needs the ability to stay on the intersection of technology, operations, and optimization. That is the most important thing—the one that has made the companies that I have worked for great. I think that staying in that intersection and taking people along on the journey of transformation is super important.

It’s one thing to have a brilliant idea, but it actually takes a lot of inspiration and a major change-management initiative to drive it forward. People are a big component of that, and it takes a very differentiated approach to bring people along, because not everyone is on the same change curve. It is an important attribute for every leader and is super-critical for people to know.

The second thing is that every change requires a lot of persistence and patience on the part of the people charged with carrying out the plan. You have to really be dogged and persistent throughout it all. Seeing the vision come to life is a beautiful feeling, but it doesn’t happen overnight.

Q: We’ve talked a bit about employee retention, but what about recruitment? What steps are you taking to find the workers you need in the first place?

A: The approach that I have primarily taken is to decentralize operations. Building more operations in an industrial park in, say, a city of 50,000 where everybody’s competing for the same pool of workers is a recipe for inflation, because as you raise the wages, everyone around you has to raise the wages, and it’s a no-win situation. But decentralizing operations gets you closer to where people live, provides access to a diversified labor pool, and also mitigates the risks of concentrating operations—and labor—in a single industrial park.

We also engage with the local community, inviting people to come and actually visit our facility, look at the capabilities we have, learn about our workplace culture, and so on and so forth.

Q: You’ve written a number of articles for **ital{Supply Chain Quarterly} on the transformative role of technology. Can technology help companies respond to the labor challenges they currently face, and if so, how?

A: Yes, there are many ways in which technology can help companies deal with the worker shortage. One thing we are doing is to use robots to augment labor.

Let me give you an example. During the height of Covid, we brought in a lot of Kindred robots. The Kindred robots were performing matching for all of our e-commerce order picking. We used the robots not only to augment our human workforce, but [also to help us comply with Covid safety measures and restrictions]. What we did was position a robot between two stations where associates were performing fulfillment tasks, which provided the six feet of distance we needed between them. So, it was an augmentation but also served as a safety mechanism. It’s very unconventional thinking, right?

We have also brought in artificial intelligence and autonomous robots, which helps us flex to meet fluctuations in demand and reduces the need for more associates in the building. So, we have embraced technology in very smart and interesting ways to be able to mitigate some of the challenges we are going to see in the future.